Mercedes-Benz (MBGn) Stock Slides as First Quarter Earnings Tumble 17% Amid China Slowdown

Key Takeaways

• First-quarter earnings declined 17.2% to €1.43 billion, while revenues contracted 5% to €31.6 billion
• Chinese market deliveries plummeted 27% to 111,621 vehicles, contributing to a 6% overall volume decline
• American market deliveries surged 20% to 81,060 vehicles, providing partial relief from Asian weakness
• Battery-electric vehicle deliveries increased 9% to 44,258 units; plug-in hybrid sales contracted 20%
• Company maintains 2026 full-year outlook, anticipating EBIT substantially above prior year

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Mercedes-Benz kicked off 2026 on a challenging note, posting a 17.2% decline in first-quarter net earnings to €1.43 billion compared to €1.73 billion in the corresponding period last year. Revenues decreased 5% to €31.6 billion, though this figure marginally exceeded analyst consensus forecasts.

Operating profit (EBIT) contracted 17% to €1.90 billion. The adjusted EBIT metric experienced an even sharper 30% decline, settling at €1.77 billion.

China emerged as the primary headwind. Deliveries in what remains the automaker’s single largest national market tumbled 27% to 111,621 vehicles. Management attributed the weakness to scheduled product transitions, broader economic headwinds, and intensifying competitive pressures.

Mercedes-Benz Group AG, MBG.DE

Across the entire Asian region, unit deliveries fell 24% to 152,662 vehicles. This represents a significant setback for a manufacturer that has historically depended heavily on affluent Chinese consumers.

The passenger Cars division absorbed the most severe impact, with EBIT plunging 54% to €809 million. The segment’s return on sales compressed to 3.5% from 7.3% in the year-ago quarter.

Bright Spots: Commercial Vans and North American Momentum

The picture wasn’t uniformly negative. The Vans business unit delivered an impressive performance, with EBIT jumping 71% to €392 million despite a modest 3% decrease in unit volume.

American market car deliveries climbed 20% to 81,060 vehicles, offering substantial offset to the Chinese deterioration. Chief Financial Officer Harald Wilhelm highlighted robust demand for recently launched models and healthy order backlogs as indicators of improved performance expected in the latter half of the year.

Fully electric vehicle deliveries advanced 9% to 44,258 units, representing 19.4% of overall first-quarter deliveries. Plug-in hybrid variants experienced less favorable conditions, declining 20% to 37,079 units.

Overall vehicle deliveries for the quarter totaled 419,430 units, representing a 6% year-over-year reduction.

Financial Position Remains Solid

Adjusted industrial free cash flow improved 18% to €2.84 billion. Net industrial liquidity increased 5% to €33.81 billion relative to year-end 2025 levels.

Research and development expenditures decreased 3% to €2.25 billion, while capitalized development investments rose 21% to €861 million. Capital expenditures on property and equipment grew 9% to €749 million.

Basic earnings per share declined to €1.49 from €1.74 in the comparable period.

Regarding corporate developments, Mercedes-Benz finalized agreements in April 2026 to divest the Athlon Group to BNP Paribas, with transaction completion anticipated during the second half. The manufacturer also advanced its “Own Retail” strategic initiative in Germany, completing the disposition of six additional retail operations during the first quarter.

Mercedes-Benz reiterated its full-year 2026 financial guidance, anticipating group revenues approximately in line with the previous year and EBIT substantially exceeding 2025 performance.

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